【willbet slot】JMP lowers DraftKings earnings projection after tough March Madness

Despite this revision, in a new update, Bender reaffirmed confidence in the company’s ability to meet its full-year 2025 guidance, citing a resilient business model and growth catalysts expected later in the year.

Bender explained that JMP recently met with DraftKings management and observed encouraging trends, including strong gaming margin expansion through February.

However, the NCAA’s March Madness tournament created headwinds for the operator. The event unfolded without major upsets, with all four number-one seeds advancing to the Final Four.

Because bettors tend to favor higher-seeded teams, this sequence of events led to unfavorable outcomes for the sportsbook operator, mirroring similar challenges seen during the recent NFL season.

According to Bender, DraftKings’ gaming margins in March were approximately 6.5%, pulling the full first-quarter margin down to 9.5% — about 80 basis points below expectations.

This deviation resulted in a gross revenue impact of $149m and a $97m drag on EBITDA.

Offsetting operational efficiencies and reduced promotional spending helped cushion the blow, limiting the net EBITDA impact to an estimated $75m for March.

As a result, Bender revised his EBITDA estimate for DraftKings’ first quarter of 2025 to $98m, now the lowest among Street projections. That figure marks a significant decline from earlier expectations and a recalibration from JMP’s prior forecast of $148m.

Despite these challenges, JMP continues to rate DraftKings stock as “Market Outperform,” while adjusting the 12-month price target down from $60 to $57, based on a slightly reduced 17.5x multiple of the company’s 2026 estimated EBITDA.

Shares take a fall

In terms of broader market reaction, DraftKings shares have tumbled 38% since the company’s last earnings report on 13 February, erasing approximately $10bn in market value.

This compares to a 9% decline in the Russell 3000 over the same period. Bender attributed the underperformance to a mix of adverse headlines, discretionary spending concerns, and regulatory overhangs.

Nevertheless, he positioned the current share price — trading at 11.5x its estimated 2026 EBITDA and reflecting an 8% free cash flow yield — as a potential buy-the-dip opportunity.

DraftKings closed at $33.21 on 31 March and has climbed to $34.50 today (2 April).

Bender believes that while the company lost momentum late in the quarter, DraftKings remains on track to hit the midpoint of its full-year EBITDA guidance, at $950m.

Notably, prior to March Madness, Bender had considered raising this estimate by $25m following a favourable performance during the Super Bowl in February.

Looking ahead, JMP views the second quarter as a strong rebound opportunity. Bender projects Q2 2025 EBITDA to reach $334m, which is 19% above the consensus estimate.

The forecast is driven in part by easier year-on-year comparisons: North Carolina’s online sports betting launch occurred mid-March 2024, with most promotional spending spilling into Q2 2024.

Additionally, gaming margins underperformed industry averages in April and May of last year, setting the stage for improved operating leverage in Q2 2025. JMP estimates a 61% EBITDA flow-through rate for the quarter.

DraftKings continues to experience revenue climb

From a revenue standpoint, DraftKings is expected to post $1.4bn in Q1 2025, a 19% increase from $1.18bn in Q1 2024.

Full-year revenue is projected to grow to $6.43bn in 2025 from $4.77bn in 2024, representing a 35% year-on-year increase. The company’s 2026 revenue forecast is $7.64bn.

Despite ongoing macroeconomic uncertainty, Bender noted that online gaming has shown resilience during past downturns, benefiting from its status as a low-cost, content-driven entertainment option.

He referenced historical data from both casino and movie theatre performance during recessions to argue that online gambling could continue to expand even in a weaker consumer environment.